Outlook for 2009
Vestas retains its earnings and revenue guidance for 2009 as initially announced on 6 November 2008 and most recently reiterated on 18 August 2009. EBIT margin is thus expected to amount to 11-13 per cent, and revenue to EUR 7.2bn. Net working capital is expected to represent 10-20 per cent of revenue by the end of 2009, as compared with the previously expected maximum of 10 per cent. Delays in the signing of contracts for certain projects and high component inventories are the main reasons for the increase in net working capital. Of the total revenue of EUR 7.2bn, service revenue is still expected to amount to EUR 550m at an EBIT margin of 15 per cent. Total investments in property, plant and equipment and intangible assets are expected to remain unchanged at EUR 800m and EUR 200m, respectively, or a total of EUR 1bn. Financial items are now expected to amount to EUR (40)m against the previous forecast of EUR (20)m. The effective tax rate is expected to remain unchanged at 28 per cent. Warranty provisions are expected to make up 3-4 per cent of revenue, reflecting strongly improved turbine reliability, enhanced uptime and performance.
Outlook for 2010
In 2010, Vestas expects to achieve an EBIT margin of 10-12 per cent and revenue of EUR 7-8bn. The revenue range reflects the uncertainty caused by the credit crisis in the short term. The slowing profitability improvement is due to the fact that Vestas in the near term will have a certain excess capacity and that it will consolidate its market leadership position through the recruitment of 600 additional R&D employees. The established markets are also in 2010 expected to represent the majority of the business. In Spain, the market is, however, witnessing uncertainty about future settlement schemes, which has brought parts of the market to a halt. Revenue of EUR 8bn, which calls for substantial progress in the US market, would open up for increased staffing and higher investments to ensure Vestas' growth after 2010 when the US market is expected to experience strong growth.
In general, Vestas expects that prices and conditions remain unchanged in 2010 relative to 2009. At the moment, the US market is characterised by excess capacity, which results in non-attractive prices and conditions on certain projects. The upgrading of the staff at the new factories in the USA will consequently take place in line with the order intake.
The order intake during 2009 provided a negative surprise with especially processing times being longer than anticipated, but in the coming months, Vestas still expects to announce orders valued at several billion EUR contributing to meeting our guidance for 2010.
Although Vestas’ underlying business is no longer characterised by major variations over the course of the year, most of the revenue and earnings in 2010 will once again be generated in the second half. Net working capital, which will fluctuate heavily during the year, is expected to amount to 15 per cent of annual revenue at the end of 2010. Service revenue is expected to rise to EUR 600m with an EBIT margin on a level with that achieved in 2009. Investments in property, plant and equipment and intangible assets are expected to be EUR 250m and EUR 350m, respectively. The completion in 2010 of recent years’ large investment programmes in especially China and the USA will lead to lower investments in property, plant and equipment. Financial items are expected to amount to EUR (25)m. The effective tax rate is expected to be 28 per cent. Warranty provisions are expected to fall to 3 per cent. Renewable energy must account for 50 per cent of Vestas’ total energy consumption in 2010.
At the end of 2010, Vestas expects to have approx 22,000 employees.
Triple15
Based on results achieved to date, the ongoing capacity expansion, the identified savings and efficiency improvement measures, including the organisational streamlining of the production and sales business units, and improved wind turbine output and the development of service products, Vestas expects to be able to lift its EBIT margin to 15 per cent and revenue to EUR 15bn at the 6 Sigma quality level not later than in 2015 – Triple15. The growth will be achieved in severe competition with the existing peers, but also in competition with new players in Asia, which typically have not developed wind turbines themselves, but are operating on license at the present time.
